Economy

EU wants a separate investment protection pact with India

Amiti Sen New Delhi | Updated on December 25, 2019 Published on December 25, 2019

India’s demand for easier work visa and study visa norms would make it easier for European companies to outsource business to India   -  MicroStockHub

Investment protection rules are now a part of the proposed FTA, which has made no progress

The European Union (EU) has expressed interest in exploring a bilateral investment protection agreement (BIPA) with India that would be delinked from the proposed free trade agreement (FTA) where ongoing negotiations are in a state of limbo.

“The EU wants to follow the model it adopted with Singapore with which it has recently concluded trade and investment deals separately. The proposal has been made to India, which is yet to respond,” an official close to the discussions told BusinessLine.

Carving out a separate investment protection agreement from the bilateral FTA — formally called the Broad-based Trade and Investment Agreement (BTIA) — which is currently under negotiations, will make it possible for the investment protection pact to be signed even if there is no progress on the BTIA.

Greater market access

Launched in 2007, the BTIA negotiations have been languishing since 2013 when the talks collapsed over certain demands from the EU such as greater market access for automobiles, wine and spirits, and further opening up of the financial services sector such as banking, insurance and e-commerce. The EU wanted labour, environment and government procurement to be included in the talks.

India’s demand for easier work visa and study visa norms as well as data secure status, that would make it easier for European companies to outsource business to India, were also not received enthusiastically by the EU countries.

“Since investment treaty is also part of the BTIA, it has got stuck with the trade and services negotiations. If a BIPA is carved out separately and de-linked from the BTIA, it could be concluded and signed even if the the bigger agreement is not,” the official said.

India terminated all its Bilateral Investment Treaties (BIT) with partner countries, including EU members, by March 31, 2017. It then asked EU countries to get into negotiations for a fresh agreement individually with India based on the model BIT passed by its Union Cabinet.

“When India had contacted EU countries individually for a new BIT in 2017, it was told that all new deals will be negotiated by the 28-member bloc as one single unit. That remains the same,” said the official.

What has changed is that while, earlier, the EU wanted the BIPA to be part of the BTIA with India, it now wants it separate, as a precedent has already been set with Singapore, said the official.

Separate negotiations

Whether India agrees to EU’s proposal for separate negotiations or not is also tied to how open the bloc would be to the country’s model BIT. The model treaty has several conditions which have been criticised by many trade partners, including the EU. Some of the conditions are allowing international arbitration only after all domestic options have failed and not permitting tax laws to be challenged.

Published on December 25, 2019
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